Senate passes one-time statewide property tax cut

The Senate passed a one-time statewide property tax cut Wednesday over the objections of Republicans who argued that majority Democrats improperly paid for it by redirecting revenue that would normally go to emergency reserves.

Senate Bill 6614 passed on a 25-23 vote Wednesday and now heads to the House for consideration. Addressing property taxes was part of both chambers' initial budget proposals that were released last month, though the bill that passed Wednesday night took a new direction from the original plan.

Under the $391 million plan, which is part of an overall supplemental budget proposal by House and Senate Democrats, next year property owners will see a one-time 30-cent cut to statewide property taxes, which will drop from $2.70 per $1,000 of assessed value to $2.40.

Under that plan, $935 million of property tax revenues would be diverted to a specified education account instead of going to the constitutionally-protected "rainy day" fund. That money will be put toward teacher salaries and other K-12 investments.

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The original Senate plan was to cut the property tax by 31 cents and use the "rainy day" fund, though to tap the fund directly would have required a 60 percent vote and support from Republicans, since Democrats hold narrow majorities in both the House and Senate.

Democrats rejected three Republican amendments, including efforts to enact property tax relief this year and to do a bigger cut without touching the rainy day fund. Republican Sen. Michael Baumgartner argued that still he believed the bill required a supermajority vote and argued Democrats were attempting to do an end run "to subvert the plain meaning of the constitution."

Lt. Gov. Cyrus Habib, who serves as the presiding office of the Senate, ultimately ruled that because no money was actually coming from the budget stabilization account, a simple majority vote was all that was needed.

House and Senate Democrats released their agreed-upon supplemental budget plan just a few hours before the final vote on the property tax bill took place.

Both chambers are set to vote on the budget Thursday, the last day of the current 60-day legislative session.

The budget, which makes several tweaks and adds about $700 million in spending to the current $43.7 billion two-year state budget that was adopted last summer, focuses on education funding, but also puts additional money into funding mental health, heath care, and higher education, among other areas.

Lawmakers are working to expedite a timeline on fully funding teacher salaries as they work on the final component to bring Washington state into compliance with a state Supreme Court mandate on education.

The state has been in contempt of court since 2014 for lack of progress on satisfying a 2012 ruling that found that K-12 school funding was not adequate. In November, the court said that a plan passed last year satisfied their earlier ruling, but the teacher salary portion needed to be fully paid for this year.

The court has retained jurisdiction in the long-running case, and gave lawmakers this current legislative session to get the work done, ordering them to present a report by April 9 detailing the state's progress.

Under the plan passed by lawmakers during last year's session, the education funding plan relies largely on an 81-cent increase to the statewide property tax that started this year. The court took issue with the fact that under the plan, the salary component wasn't fully funded until September 2019.

Republican state Treasurer Duane Davidson expressed concern with the plan to divert the money from the rainy day fund to education, saying it could weaken the state's financial position and affect the state's bond's rating.

"Raiding, or diverting, the Rainy Day Fund for today's desires is the opposite of good fiscal management," Davidson said in a written statement.

Democratic Sen. Christine Rolfes defended the action, saying that while the move may be unprecedented, it's in response to what they have heard from homeowners who saw their tax bills go up as part of last year's education plan.

"It was unprecedented that we raised the property taxes so high last year, and I think all of us regret that," she said. "What is also unprecedented in this underlying bill is that we're giving some of it back."

The budget, which includes no new taxes, leaves $2.4 billion in both restricted and unrestricted reserves at the end of the current two-year budget cycle.